High Anxiety and Social Security Maximizing Madness

My wife used to thank me, with her tongue firmly planted in her cheek, for never being rich. She would say, "It seems to me that the more money people have, the more they worry about it."

And gosh, did those words of wisdom come home to me these past couple of weeks, following yet another column I wrote about the maximizing Social Security madness. My inbox has been crammed with hundreds of emails from frantic seniors who are worried sick they might make a decision about when to take their Social Security benefits that will result in them possibly leaving a few bucks on the table.

Of course, I certainly understand that having more money is better than not having enough. But I can't tell you how many married seniors have emailed lately telling me that they have their home paid off, they have multiple cars and vacation homes — and many of them have close to, or even more than, a million dollars in investments. And they are losing sleep because they can't decide when to start their Social Security benefits. They wonder if option A, in which they will get let's say $60,000 in combined benefits per year starting at an early age, is better than option B, in which they will get maybe $72,000 in annual benefits starting at a later age.

I just want to tell these people to chill out and relax! No matter which way they go, they are financially light-years ahead of the average Social Security beneficiary who is trying to decide if she should use this month's Social Security check to pay her past-due medical bills or to buy groceries!

Also, to those folks who ask me to help them decide what to do, I tell them they are talking to the wrong person. I am NOT a financial planner. I am just an old, retired Social Security guy who knows Social Security rules inside and out. So, I can tell them how the rules work. But I can't tell them what to do.

And if you need further proof that I am the wrong guy to ask for financial advice, consider this: my wife and I started our reduced Social Security benefits at age 62. Any financial planner would have told us we were nuts. The prevailing financial wisdom is to delay taking your benefits for as long as possible in order to get a higher monthly rate. But guess what? We don't care. For more than 12 years now, we have been having way too much fun spending our reduced retirement benefits. And if we come out on the short end of the Social Security stick in the long run ... well again, so what? We couldn't care less.

But judging from my emails, my wife and I are in the minority. These emails from already well-to-do seniors just ooze financial fear and high anxiety. Again, to them, my message is simple: Chill out, make a decision and enjoy the rest of your life.

So, I will use the rest of today's column to answer questions from folks who are simply confused about the rules. And I will start with this summary. People turning 66 before Jan. 2, 2020 can use a legal loophole that allows them to file for spousal benefits on a husband's or wife's Social Security record (assuming that husband or wife is getting or is eligible for Social Security benefits) — and then delay taking their own retirement benefits until age 70, at which point they can switch to their own retirement account and get a 32 percent bonus tacked on to their monthly benefits.

Q: I'm 67. I want to wait until 70 to take my Social Security. My wife turned 65 last December. She never worked very much. Her full retirement benefit is only $689. My full benefit is $2,840 and will be $3,748 at 70. We understand my wife must be 66 years old before I can file a restricted claim on her record. And if we do that, we heard that she won't be able to switch to spousal benefits on my record when I turn 70 because she took her own at 66.

A: You are wrong on a couple points. Your wife does not have to be 66 in order for you to employ this restricted claim strategy: YOU must be age 66. And you are.

So, your wife can file for her reduced retirement benefits now. Then simultaneously, you can file for spousal benefits on her record. You would get an amount equal to 50 percent of her full rate, or about $344, even though she is getting a reduced retirement benefit of about $620.

Then at age 70, you can file for your $3,748 augmented retirement benefit. And despite what you heard, your wife would then be able to switch to spousal benefits on your record. She will get about half of your full retirement rate, not your age 70 rate. She can only put her hands on your age 70 amount after you die.

Q: If my wife does this file and restrict thing, will that lessen what she will be due in widows benefits after I die? Here are the numbers. I am 68 and I get $2,444 per month. I took mine at 66. My wife is about to turn 66. Her full benefit is $1,497.

A: Whatever she does on her own record now will have no effect on what she would be due as a widow after you die.

So, once she is 66, she can file for spousal benefits on your account. She will get $1,222 per month. At age 70, she can then file for her own retirement benefit. With the 32 percent bonus, she should get about $1,975 per month. Then, assuming you die before she does, she will keep getting her $1,975 retirement benefit, and she will get an additional $469 in widows benefits to take her up to your $2,444 level.

Q: I am turning 66 this month. My wife is 58, but she is getting Social Security disability benefits. Can I use the loophole? Or does she have to be getting regular Social Security?

A: She is getting "regular Social Security." It just happens to be a disability benefit instead of a retirement benefit. So, yes, once you are 66, you can file for spousal benefits on her account and save your own until age 70.

If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.